The 52nd biennial International Paris Air Show will take place from June 19th – 25th and will bring together 2,379 exhibitors from 47 countries to showcase the latest technological innovations in the industry. Notably, the show will include the first showing of the F-35 at the Paris Air Show and additional information regarding Boeing’s New Midsize Airplane (“NMA”).
Boeing CEO, Dennis Muilenburg announced this past week that Boeing will begin shifting a portion of its manufacturing work to China and other overseas markets. This move is a part of Boeing’s reshaping effort which hopes to increase the profitability of its core commercial jetliners and increase defense exports, while cutting costs.
On Wednesday, Pratt & Whitney disclosed that it is proposing an upgrade to F-35 engines that could increase overall thrust by ~10% and decrease fuel consumption by ~6%. Pratt believes that this upgrade, which is being called the F135 Growth Option 1.0, provides an attractive option for three primary reasons: (i) ease of integration into any of the three F-35 variants; (ii) compliance with partner and foreign partner requirements; and (iii) equal cost to the existing engine, but heightened performance.
On Monday, President Donald Trump released his GFY2018 budget proposal which included ~$640 billion for military spending. This request is more than $50 billion over the current congressional budget caps and only ~$15 billion more than former President Barack Obama budgeted in his forecast for GFY2018.
Boeing faced years of delays before successfully introducing its 787-series aircraft, but made an on-time delivery of its first 737 MAX aircraft to Lion Mentari Airlines this week. Boeing encountered some problems with 737 MAX engines last week; however, they moved forward with the delivery schedule as not all aircraft were impacted by the issue.
On Wednesday, Boeing announced it has temporarily paused test flights for the new 737 MAX aircraft after discovering an engine issue. The announcement came just days before Boeing planned to deliver its first 737 MAX aircraft to Malaysian carrier, Malindo Air.
After the GFY17 budget cleared the house on Wednesday with a 309 to 118 vote, the U.S. Senate on Thursday voted 79 to 18 on a $1.1 trillion spending bill to fund the government through September; the bill now goes to President Trump’s desk for final approval. Of the total $1.1 trillion, the measure contains $593 billion for defense spending, an increase of ~$20 billion over GFY16 enacted levels and ~$16 billion more than President Obama’s budget request.
Boeing, Lockheed Martin, and Northrop Grumman all announced 1Q17 earnings this past week with mixed results. Boeing raised its forecast for full-year earnings after it reported a ~19.0% year-over-year (“YoY”) increase in profit for 1Q17. However, Boeing’s revenue decreased ~7.3% YoY and missed consensus analyst estimates by ~$330 million (~1.5%).